Parents raise concerns over Avonreach Academy Trust's finances

PARENTS have raised concerns over an academy trust's latest financial statement which says there is a “significant” possibility the trust may collapse, according to an independent auditor’s assessment.

The statement suggests that low student numbers in certain years, a reduction in sixth form funding and unfunded costs imposed by the government have drained the reserves of Pershore High School, one of the schools within the Avonreach Academy Trust (AAT).

But the Trust, which also oversees Cherry Orchard, Inkberrow and Norton Juxta Kempsey first schools, has said the financial situation it faces is not uncommon.

Trustees say they have been working with the Department for Education (DfE)for many months on a plan to work towards the trust's accounts showing a surplus.

Parents contacted the Worcester News with concerns after AAT released a financial statement which covers the period between August 2017 and 2018.

In it, it referenced AAT’s reserves, which according to the statement have now been “exhausted” with its financial position being “a risk.”

The statement, released at the end of January said: “Prior to the formation of AAT in August 2017, the governing body of Pershore High School had built up financial reserves to cover a known change in local demographics.

"Governors were determined to do everything possible to maintain the curriculum offer for the sake of pupils, something that can no longer be sustained. The historically low birth rate, especially in two year groups, has reached its peak but it still affecting sixth form numbers.

“These reduced pupil numbers, coupled with a significant reduction in sixth form funding has accounted for a loss of £400,000 in income.

“This allied to unfunded cost pressures, in relation to National Insurance, pension and staff pay rises illustrates why the trust exhausted its built up reserves.

“Having recognised the financial position as being a risk, trustees have prepared a recovery plan that puts in place actions to mitigate that risk.

“This plan includes a detailed cashflow forecast, risk register and analysis, review of spending (including staff and other costs) benchmarking and efficiencies.

“The board of trustees will have a reasonable expectation that the trust has adequate resources to continue its operational existence for the foreseeable future with support from the Education and Skills Funding Agency by way of drawdown of future funding.”

Crucially, an independent auditor who has examined the accounts, writes that the issues “indicate that a material uncertainty exists that may cause significant doubt on the group’s or the parent academy’s ability to continue as a going concern.”

One parent who did not want to be named, said: “It is shocking. I find it astonishing - looking at the accounts the financial situation looks terrible.”

On the School Changes in Pershore - Parent Voice Facebook page, Rachel Clements wrote that sections of the accounts were “very alarming.”

She said: “I’ve got a child at Pershore High School. I’m now very worried about the standard of education there. What guarantees are AAT giving us that they can adequately educate our children? I haven’t seen any.”

Other parents also questioned if a recently approved age-change plan, with the first schools taking on year 5 and 6 pupils and Pershore High squeezing middle schools in the other direction by taking on year 7 pupils, was put forward as a way to raise money.

An AAT statement said: “They (the accounts) show that the trust was in a deficit situation as of the end of 2017/18 financial year and trustees have been well aware of this for some time. The main cause of this, besides the well publicised low levels of government funding in education generally, is a temporary fall in pupil numbers currently in the secondary phase year groups.

“This is not an uncommon situation, with recent reports suggesting that almost one-third of local authority maintained secondary schools and 55 per cent of trusts across the country are working with deficit budgets.

“The trust finance team have been working with the DfE for many months on a plan to cover this period, with an in-year surplus position expected during the financial year 2019/20. This plan, which affects the high school only, endeavours to ensure that this does not impact on the education of the children within all of the Avonreach schools.

“We would like to stress, again, that the recently approved (age-change) proposal was not financially motivated.

“Indeed, the implementation of this age-range change will, in the time period at issue here, result in a net cost to the trust, rather than a net income.

“We are implementing age-range change to improve educational outcomes for the children and provide parental choice.

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